I did a quick search and didn’t find anything on the topic but I am sure it’s been discussed here before. But I felt compelled to share this since there are like 7 days left in the month.
I just recently learned about Series I Savings Bonds (or commonly known as I-Bonds) and was amazed at the current guaranteed interest rate of 7.1%. I just learned recently that starting next month, on May 1st, the next composite interest rate for the I-Bond is going to be 9.62%.
So if you invest money into Series I Savings Bonds before the end of the month you get 6 months at 7.1% followed by 6 months at 9.62%. Which comes out to be guaranteed 8.54% return for 12 months.
Series I Savings Bonds are tied to the inflation rate so they are a great vehicle for protecting some cash from short term or longer high inflation. It will protect the money from inflation erosion.
A single person can buy $10k in I-Bonds or if married $20k. There are ways to get even more as well. There are some pros and cons. Some cons: you are locked out of the money for 12 months, and if you draw the money out before 5 years, you lose the last 3 months of interest. Other pros besides protection from inflation: you can never lose the principle, i.e. the interest rate can’t go below zero. The interest gained is exempt from state and local taxes. If the interest is used for higher education, then you don’t have to pay the federal government taxes on the interest. Generally, you don’t pay any taxes on the bond until you redeem it; matures in 30 years – but you can set it up to where you pay the interest each year using accrual method, but it’s a bit more paperwork and your locked into doing it forever.
Check out the following URL to read more about I-Bonds. You can search youtube to watch some videos as well.
I personally plan on using Series I Savings Bond as a vehicle for a $50-$100k emergency fund. Each year I’ll put $10k. After one year I’ll have $10k accessible, after 2 years, $20k. So it’ll be similar to like a CD ladder of sorts, where if I keep putting money in – that money I will be locked out of for year, but if there is enough in the fund, then it won’t matter. Like if I have $60k in the fund, I’ll have $50k accessible for emergencies (plus all the interest).
Again there is like 7 days left to take advantage of this at a guaranteed 8.54% rate for the next 12 months. Otherwise starting next month you’ll get 9.62% the first 6 months, followed by X interest the following 6 months (which will correspond to the inflation rate set on November 1st, 2022).
I regret my 16 digit randomly generated soup.
which is why you get those presentations at defcon about eliminating passwords entirely, etc.